Advisory Committee on Biotechnology and 21st Century Agriculture (AC21)Plenary Meeting

August 27-28, 2012

Columbia Ballroom B

Hyatt Regency Washington on Capitol Hill

400 New Jersey Avenue NW Washington, DC 20001

Meeting Summary

On August 27-28, 2012, the United States Department of Agriculture (USDA) convened a plenary session of the Advisory Committee on Biotechnology and 21st Century Agriculture (AC21). The meeting objective was:

To complete all substantive work on a report to USDA addressing the charge to the AC21 from USDA Secretary Thomas Vilsack.

The AC21 includes representatives of industry, state, and federal government, nongovernmental organizations, and academia: Mr. Russell Redding (Chair), Ms. Isaura Andaluz, Ms. Laura Batcha, Dr. Daryl Buss, Mr. Lynn Clarkson, Mr. Leon Corzine, Ms. Melissa Hughes, Mr. Alan Kemper, Mr. Douglas Goehring, Dr. David Johnson, Mr. Paul Anderson, Mr. Michael Funk, Dr. Gregory Jaffe, Dr. Mary-Howell Martens, Mr. Jerome Slocum, Ms. Angela Olsen, Mr. Keith Kisling, Dr. Marty Matlock, Mr. Charles Benbrook, Dr. Josephine (Josette) Lewis, Mr. Lynn Clarkson, Mr. Barry Bushue, and Dr. Latresia Wilson. All members except Dr. Benbrook and Mr. Kemper were in attendance. Mr. Jack Bobo from the Department of State and Ms. Mary Lisa Madell from the Office of the United States Trade Representative attended as ex officio members. Dr. Michael Schechtman participated in the two-day session as the AC21 Executive Secretary and Designated Federal Official (DFO).

A full transcript of the proceedings will be prepared and will be made available on the AC21 website at http://usda.gov/wps/portal/usda/usdahome?contentid=AC21Main.xml&contentidonly=true .

http://www.usda.gov/wps/portal/usda/usdahome?contentid=AC21Main.xml&contentidonly=true .

Below is a summary of the proceedings.

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I. Welcome and Opening Comments

Dr. Schechtman welcomed members of the AC21, the AC21 Chair, ex officio members, members of the public, and any senior officials who may be in attendance. He also welcomed a new ex officio member on the committee from the Office of the U.S. Trade Representative, Ms. Mary Lisa Madell, who replaces Ms. Sharon Bomer. He also noted that there would be time set aside for public comments at 3:15 that day.

He noted protocols for the running of the meeting, for signing up for public comments, and for interaction with the press, including that only AC21 members may speak during the meeting and that those at the meeting to provide public comments need to sign up at the registration table. He indicated that transcripts of this meeting and the meeting summary would be available online at the AC21 webpage, but that it might take a little longer than normal owing to travel commitments . He requested that those intending to provide public comments give to him a hard copy and an electronic copy of their remarks, and noted that each commenter will have 5 minutes to speak.

Dr. Schechtman reiterated Secretary Vilsack’s charge to the committee, namely,

1. What types of compensation mechanisms, if any, would be appropriate to address economic losses by farmers in which the value of their crops is reduced by unintended presence of GE material(s)?

2. What would be necessary to implement such mechanisms? That is, what would be the eligibility standard for a loss and what tools and triggers (e.g., tolerances, testing protocols, etc.) would be needed to verify and measure such losses and determine if claims are compensable?

3. In addition to the above, what other actions would be appropriate to bolster or facilitate coexistence among different agricultural production systems in the United States?

He noted that the Secretary had requested that element #3 be worked on after elements 1 and 2, but that it had become clear that a response to the Secretary would include responses to all the questions. He described the history of the committee’s work, including the past work of its working groups, and described the process that had gone on between the fourth plenary session in May 2012 and the current meeting, including the process of drafting recommendations, soliciting comments from members, sending out a draft “Chair’s Report,” soliciting comments, and preparing the current draft before the committee.

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He noted that the AC21 would need to complete all substantive work on a final report over the two days of this meeting: there will be no more plenary sessions to complete the report so the substantive issues need to be resolved now, in public session. He added that he and the Chair had tried to capture the range of viewpoints expressed by members, including some ideas that were provided in writing rather than having been discussed in the plenary session. He noted the main unresolved areas, particularly around the compensation mechanism recommendation and a few other areas, including some definitions that need to be discussed, such as the definition for “coexistence,” and described how to interpret brackets found in the discussion text.

He listed the documents provided for AC21 members and the public:

The Federal Register notice announcing this meeting The provisional meeting agenda The AC21 Charter AC21 Bylaws and Operating Procedures A package of biographical information for each of the AC21 committee members A statement of the Charge to the committee from Secretary Vilsack The meeting summary from the previous AC21 plenary session An earlier paper on the subject of coexistence prepared by a previous iteration of this

committee. The revised Chair’s Report, the draft document for discussion at the meeting (provided

here as Appendix I). An annotated version of the previous draft of the Chair’s Report, showing all the

members’ comments received. A proposed timeline describing the final steps for completing the work on the report.

Note: All the above documents are posted on the AC21 web page.

He also briefly went over the agenda and noted that the AC21 is a discretionary committee, which may or may not meet again in the future following national elections. He thanked members for staying engaged in the AC21 process and for their professional approach to the tasks at hand.

He also noted that the final report will represent compromise, and thus will be a report that will not be ideal to anyone, and pointed to the decision that each member will face in the future as to whether to support the report. He expressed a sense of encouragement with the distance the AC21 had come thus far, and noted the opportunity the committee has to improve on the results of previous discussions on this issue.

He then introduced the AC21 Chair, Mr. Russell Redding, Dean of the College of Agricultural and Environmental Sciences at Delaware Valley College and former Pennsylvania Secretary of Agriculture.

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Mr. Redding thanked all the committee members for their continued work and noted the personal sacrifices members have made to participate. He described the efforts he had made to review the draft, previous work, and the committee Charter.

He emphasized the significance of the committee’s efforts. He noted the need for the AC21 to give agriculture its best thinking, and to lead, and the opportunity to send a clear signal that coexistence is a core value and that the status quo is insufficient for agriculture to thrive. He expressed optimism that the AC21 would be able to produce a report but indicated the need to close gaps. He noted that the AC21’s strength, and agriculture’s strength, lies in their diversity.

He noted the importance of education and outreach as part of the final package as outlined in the draft report, commended members for the civility of their discussions, and exhorted members about the need to find compromises. He thanked Dr. Schechtman for his hard work. He then introduced Mr. Rob Burke, Designated Federal Official for the National Genetic Resources Advisory Council, who reported on progress in getting that committee back up and running after a number of years of inactivity.

Mr. Burk noted that the work to enable the NGRAC to hold meetings was almost, but not entirely, complete. Only one small matter regarding budgetary authority for the committee remains. He closed by noting that the members of the AC21 would be informed of NGRAC activities, and advised the AC21 that if the committee wished to make recommendations to the NGRAC, any such recommendations should be addressed to the Secretary of Agriculture.

II. Discussion about process for completing the AC21 report

Dr. Schechtman offered remarks about the plan to finish up the work of the AC21 on the Chair’s report. He touched on four topics: expectations; process; timing; and consideration of the report in total plus final input.

He noted that in the previous AC21, members wrote the report, and finalized every word to achieve complete consensus, with the result that reports took a long time to produce and contained little in the way of recommendations. Under the Secretary’s direction, the process was changed to lead to reports being drafted in a fixed time frame, with recommendations, and as much consensus as can be reached in that time. To finalize the report, out of this plenary will need to emerge a good idea of what all the recommendations look like, how the report is organized, and what to call it. It will not be possible to edit the document line by line. He requested that members refrain from offering purely editorial changes in text as opposed to recommendations, and only raise textual issues that would keep them from signing on to a consensus. He indicated that following the meeting, he and the Chair would work from notes and transcript to produce a final report, without adding new ideas not discussed in the plenary.

He indicated that a provisional final report would be provided to AC21 members by October 3, 2012, at which time the following types of editorial suggestions would be entertained:

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typographical errors; errors in fact; and editorial changes that do not change the intent or meaning of the original text. Such comments would be due back by October 18, 2012. A near-final report would be circulated to members by October 23, 2012 and members would need to respond back by November 8, 2012 to indicate whether or not they are joining consensus on the report and whether or not they are providing any comments upon that decision. Comments would need to be no longer than three pages in length, and would be appended to the final report for public distribution. He cited the AC21 Bylaws to demonstrate that the approach was consistent with committee requirements.

There was discussion about the posting of the draft report and the earlier version with comments on it on the AC21 website. Some members expressed concern that the draft text was posted on the AC21 website and that it included additional options for recommendation I beyond the single one discussed at the last plenary session. Dr. Schechtman noted the “sunshine” requirements of the Federal Advisory Committee Act. He also recalled that at the last plenary session, while a good number of AC21 members supported the initial option on the table, a sizable number of members did not. “Option 2” was a significant new proposal offered by some of those members who had not supported the initial option, and “Option 3” was an attempt by the Chair and him to provide a “bridging” alternative to try and find consensus. He added that the 3 options do not yet bind members to a final text, and that the Chair and he would take the results of the meeting, digest them, and try to capture the highest level of consensus in final draft. He added that committee Bylaws require the inclusion of all subjects of discussion for the public. The Chair confirmed this approach. There was also subsequent discussion in which several members pointed out that “Option I” was in their minds already a bridging, compromise position.

One AC21 member inquired whether the October 3 and 23 drafts would be released to the public, and further asked when the final report would be issued.

Dr. Schechtman initially indicated that there was a possibility that the October 23 version might be publicly releasable, but later revised his answer and indicated that he would need to check with senior officials. (Later in the day he revised his view to indicate that it would not be proper to release the report to the public until the Secretary officially received it, and that hence no draft would be public or could be discussed outside members of the committee until such time as the Secretary received it.) He also indicated that the presentation of the report to the Secretary would occur in the November-December 2012 time frame.

Another member inquired about when inaccuracies in the report could be noted and fixed. Dr. Schechtman noted that errors in fact and other editing could occur after members received the October 3 draft. Comments on the October 3 draft will be internal but the decision on joining consensus will be a public matter.

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In response to continuing questions about document drafts being made public, Dr. Schechtman reiterated that all committee documents and emails are publicly accessible. He added that for a public meeting, all meeting documents must be made available to the public so they were posted electronically. He apologized for the consternation that may have caused, but added that report drafts had not existed for earlier meetings so the issue had not arisen.

One member noted that she felt rushed by the timetable, and wondered what the committee would no next year, if there is no change in Administration. The Chair noted the items in the parking lot, and Dr. Schechtman suggested that he was certain that additional work could be found.

Another member expressed appreciation for the work of the chair and DFO in helping members find consensus, and indicated his view that the draft had evolved in a helpful way.

Several members offered additional comments about the rush to conclude the discussion. Dr. Schechtman noted that it would be impossible to hold another meeting before national elections, and that December is always a difficult month to schedule meetings, with the potential end of an Administration adding to the complexity. He acknowledged the difficulty of the timing and the ambitiousness of the timeline, but added that the committee was “under the gun.”

III. Discussion of Recommendations—Morning of Day One

The discussion continued with the Chair inviting comments on the recommendations in the revised draft Chair’s report.

One member raised questions about the use of of terms like “gene flow,” “pollen flow,” and “unintended GE presence” in the report, suggesting that instead the term of art should be “unintended presence,” and that a number of terms in the report needed definition. Dr. Schechtman noted that a challenge to drafting the report is that the charge to the committee specifically referred to unintended presence of GE material, so that the report needs to be true to the charge. He added that some terms had not been fully defined, but noted that in the drafting of the report, careful consideration had been given to the use of the terms “pollen flow” and “gene flow.” One member suggested that the term “unintended genetic presence” should be used instead.

Another member noted that she had twice offered a statement to the effect that “farmers do not have a right to adversely affect their neighbors” but that it had never been included in the draft. Dr. Schechtman replied that the decision not to include it had been a judgment call based on committee discussions and on the fact that a discussion on farmers’ rights was not in the Secretary’s charge to the committee.

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One member offered the view that focusing the report on identity-preserved products was too limiting, and that the AC21’s consideration should also include the unintended presence of GE materials in other GE crops as well as products approved in Europe but not in the United States. He also suggested that focusing on gene flow is also too restrictive, noting the importance of volunteers that may arise not as a result of gene flow. He suggested that the focus should be on unintended presence at the farm level whether from gene flow, volunteers, etc. He also suggested that terms such as “stakeholders” and “industry” were too vague, and the precise groups being referred to instead needed to be spelled out in place of such terms.

Two members questioned the presence of a citation in the draft from President Obama’s 2012 National Bioeconomy Blueprint regarding the importance of technology to agriculture and the the economy. Dr. Schechtman noted that it had been provided in suggested introductory text provided to the AC21 at an earlier meeting by a committee member who was not present at this meeting. It was suggested that parallel text be added noting the importance of organic agriculture and of the use of technology for organic agriculture. A member offered to provide a link to a report on Rural Economies from which such a quote could be obtained.

One member suggested that the terms “unintended presence” and “economic loss” needed to be defined, and that the text around the proposed actions that the Secretary might take to establish a compensation mechanism for unintended presence-related losses should note that those actions should be taken “in collaboration with other U.S. agencies”. Also, she added that the document should spell out that the Secretary should make a recommendation to Congress to implement such a mechanism. Mr. Redding noted that in his view, what is being proposed is actionable and there is no need to go into details about the process of making the recommendations happen. He added that the report already refers to coordination with the work of other Federal agencies.

There was additional discussion on the rights of farmers to impact their neighbors, farmers’ ethical responsibilities, and the inevitability of farmers having impacts on their neighbors’ farming operations.

The discussion turned to the three potential options offered for recommendation I. Different views were expressed on how much the proposed recommendations would improve the way neighbors would interact, and who would suffer negative impacts as a result of any new measures. One member noted the mutual responsibilities that neighboring farmers bear to each other. Another member emphasized the economic importance of the small number of farmers who produce food for global consumption, and the need not to impair that economic activity. He raised further concern about the legal implications of potentially altering crop insurance requirements and reminded members that recommending a risk retention group-type compensation mechanism would not be subject to such pitfalls.

One member noted the Secretary’s instructions to look to the future and not be bound by what is possible today and offered the view that option 2 would be her preferred choice, in that it spreads out financial responsibility for compensation to all marketplace participants. She noted that some of her

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constituents were recommending that no additional GE products should be approved until this issue is resolved. Another member suggested that organic farmers do not want to have to buy insurance, nor do they need protection. Another member indicated that she would prefer the third option, but noted that it does not address seed producers.

One member indicated that she could not support option 2, which she viewed as extreme, because it would put technological benefits at risk and would require GE producers and industry to take costly measures that are not commensurate with risk to avert a threat of lost access to other USDA programs. Two other members supported this view. One member additionally noted the emphasis by seed companies on ensuring seed quality and purity and delivering seed that meets buyer quality needs.

There was discussion about what farmers actually do as part of their contractual and neighborly obligations to minimize unintended presence in other farms, and the training farmers receive in stewardship and meeting requirements. One member noted extensive activities undertaken by conventional and GE farmers to work with their neighbors. One member noted the activities that had been undertaken by the alfalfa industry to create new approaches to address concerns, offering the example of grower opportunity zones. She added that in the end, technology providers cannot control how farmers act, noting that the original manufacturers of guns and cars are not held responsible for what gun and car owners do with their products.

Another member noted that seed companies vary in their practices and standards. He expressed the view that the development of new GE crops with functional traits will fundamentally change the economic implications of using new technology because tests adapted for routine commercial use may not be sensitive enough to detect the products even though markets may be disrupted by their presence. Such products in his view may be safe but economically damaging. Voluntary restrictions on the planting of such crops as exist today are in his view inadequate. In some circumstances it may not be possible to even know who a neighbor is who may be planting such crops. He expressed the view that the regulatory system must be changed to address this issue and responsibilities need to be shared.

Another member expressed support for option I, noting his opposition to the development of thresholds for GE presence and the importance of exports for the commodity he produces, wheat.

Another member expressed support for the idea of coexistence management plans, noting an analogy with nutrient run-off management approaches. In response to the idea that farmers already take considerable steps to address coexistence concerns, he suggested that what might be missing in part is documentation of those activities. He also noted, though, that not all farmers are taking all the necessary steps.

There was additional discussion about what types of activities that might promote coexistence are actually covered under existing contracts for IP and commodity products and what the consequences might be for failure to follow a contract or failure to remediate if problems occurred. It was noted that in some instances farmers might lose the ability to access GE technology if they repeatedly failed to meet their contractual obligations. One member noted that a key goal is to avoid farmer-to-farmer

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litigation, and the intent of a compensation mechanism is to avoid such occurrences. She added that it was up to the AC21 to figure out what to do when neighbors mess up.

The Chair noted that, despite some of the discussions on risk retention groups, he had thought that a crop insurance mechanism had been decided on previously by AC21 members as the appropriate approach. He added that if discussion of the overall type of mechanism to be recommended was reopened, the AC21’s work would not get completed. He reiterated that the choice was between provisions for such an approach.

IV. Continued discussion of recommendations—afternoon of Day I.

Note: Discussions took place before and after the period of public comments. For ease of reading, those discussions are combined into one section.

The Chair reminded AC21 members that public comments would take place at 3:15 and noted that work on Recommendation I needed to be resolved that day, or else the following day’s tasks would be difficult. He characterized the three options as follows: option I is the “base recommendation;” option 2, an option advancing a 0.9% trigger/threshold plus some mandates; and option 3, an option with greater focus on joint coexistence. He asked members what would need to be done to modify option 1 to broaden support for it.

One member indicated that he could not support option 2 because of its advocacy for a 0.9% trigger. He noted that a number of industry representatives had jointly submitted a letter suggesting that the government should be tasked to figure out such triggers, but that the AC21 should not be assigned that task. Another member asked if that letter could be shared with committee members and the member agreed to do so. In response to a further question, the first member was not sure he could offer support to a revised version of option 2 without a specific trigger value set. Another member echoed the view that no threshold value should be set. In further discussions, a few members expressed support for a modified version of option 2 calling for the establishment of a trigger without a specified trigger number.

One member suggested that the idea of leaving out a trigger number might be acceptable, provided it was coupled with a pilot program, offering both incentives and consequences for not joining. She added that a pilot program allows learning to take place. The Chair expressed concern that if an approach containing both incentives and consequences was advanced, it would be hard to find consensus around middle ground. He asked whether such elements could be folded into option I.

Another member framed the discussion as a risk versus reward and property rights issue. He noted that farmers make choices about what they grow on their farms, choices that come with risks and rewards. He offered the view that option 2 offers more punishment than incentives. He indicated that he shared the goal of finding common ground, but noted that if one intended outcome was the avoidance of farmer-to-farmer litigation, that was already being met: such litigation does not currently occur. He noted that current litigation is between organizations. With regard to the possibility of a pilot program,

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he observed the tendency of pilot programs to become permanent even with sunset provisions. He noted that the concept of setting up a pilot program to see if a need exists is a backwards approach. He emphasized that for a number of members of the AC21, option I was a compromise position worked out over hours of discussions, and he expressed his continued support for that option.

Another member noted that the tone of option 2 might not lend itself to consensus, but that she could support either options 2 or 3, with the proviso that no specific numerical triggers were included.

One member expressed the view that members of the AC21 might not have the expertise to set a precise numerical trigger level nor to offer the view that a trigger is needed, but that such matters should be left to insurers. He added that if a compensation program were to be set up, most insurance providers would likely use a pilot program as a first step. In his view, if the Secretary were to seek the legal authority to establish an insurance mechanism, a pilot program would almost certainly ensue. With reference to option 2, he questioned who would have authority to set consequences for non-compliance. The Chair observed that in option 2, incentives and consequences are very specific, and could be a hard sell among AC21 members and around the country.

One member indicated that there were parts of each option that he found appealing. He noted the need for more data, and suggested that an insurance fund would need more data to work most effectively. He suggested that establishing triggers was not necessary for the AC21. He suggested that a pilot program could help address the lack of data at present. With regard to offering incentives for participation in programs, he suggested that the government does that all the time in other arenas, e.g., via the tax code. He liked the idea of fostering joint coexistence activities among farmers, and reinforcing the theme that coexistence is important in whichever option is chosen. He supported the idea of codifying existing activities by farmers to support coexistence.

Another member reiterated the importance for her of the concept of incentives and disincentives with consequences, but was open to the idea of communicating about the concept in a way that’s not prescriptive. In her view, without those elements, there would not be enough change from the status quo.

One member indicated that he could not support option 2, but noted that crop insurance, when implemented, has had a regional focus, introduced in different places at different times. He noted that he could not support a specific numerical trigger in the document, and that his preference would be for option 1, but that he saw the element of option 3 that supports neighbor-to-neighbor conversations as a strong suggestion. He noted that such conversations are happening now but in an unofficial way. He noted that contracts with seed technology providers could provide a vehicle for education around what needs to happen in those conversations and in neighborly interactions. He suggested that for him, with some tweaking or expansion, option 3 could foster good conversations between producers.

Another member agreed with this conclusion with a different reasoning. She suggested that members of the organic community would be reluctant to buy into option I. Instead she favored option 3, which would offer both a pilot program, which could be kept small, as well as incentives to make farmers want to participate.

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One member noted that, in her view, option 2 stigmatizes GE producers and is too Draconian. Another member suggested that disincentives would be unlikely to get buy-in from the National Corn Growers Association unless the premiums received for identity-preserved crops were shared as well. In his view, disincentives are not appropriate because corn producers do not believe they are currently doing anything wrong. He supported option I and the latitude it would provide the Secretary to obtain additional data. Another member also supported option I and suggested that if incentives are calibrated correctly, punitive actions should not be needed. He added that in his view the disagreements about establishing a pilot project are semantic, but added that data does not now exist to justify setting up a pilot program.

Another member indicated that he could back off his earlier recommendation to the AC21 about inclusion of a specific market trigger number of 0.9% but noted that in his daily activities in the marketplace, 0.9% as a trigger for purity gets him into every global market today. He expressed support for setting up a pilot program and offered to provide data to a USDA-supervised data gathering effort. He noted that, in his view, establishing requirements in contracts is a good way of sensitizing people who today see no problems in their current practices. He offered his preference for option 3 as a way forward.

One member noted that any plan will need some sort of trigger/threshold, but suggested that the AC21 should not specify one specific number for all crops for all time. Instead, any such number would need to be reviewed regularly, and be crop-specific.

With regard to option 3, one member noted that the use of “would” and “could” was not consistent and should be made so. Another member questioned tasking the Natural Resources Conservation Service with helping to assess the acceptability of coexistence plans, noting the already-limited resources for their activities with respect to water quality and the tenuous link, in his view, of the proposed activities with conservation mandates. Another member noted that others, including extension agents and State Departments of Agriculture, could pitch in, as they have experience in working with organic producers and with third party verifiers. Another member noted that Farm Service Agency involvement would be beneficial and that information from organic system plans developed by organic farming operations could be made available to USDA and simply integrated into the process without the involvement of additional agencies. Another member noted the importance of being able to share enough information but not too much in having an efficient system.

Another member expressed support for option I, noting that setting up a pilot program would be putting the cart before the horse. Research, in his view, would be needed to see what was needed to set up a pilot program. The Chair inquired whether proposing a research program would be a middle ground between nothing and establishing a pilot program.

After public comments, the Chair resumed the discussion, looking for middle ground, and suggesting: the use of option I as a base; acknowledging the need for data and offering the use of crop insurance as model; adding reference to an insurability trigger; offering the incentives/disincentives concept as in

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option 3; and adding joint coexistence plans as described in option 3. He asked AC21 members whether such a revised option for Recommendation I would fit the bill.

One member noted that organic producers would not be supportive of an option I-based solution. Another member questioned whether IP producers should be required to pay for access to compensation. She acknowledged, however, that incentives work better than punitive threats and that the desired end result is prevention of unintended presence, rather than punitive action. One other member, noting that no organic farmer had requested a compensation mechanism before the committee, questioned whether establishing such a mechanism would be creating an instrument no one would want to use. The Chair reminded the committee of the charge and the discussions to date, and the inadvisability of revisiting all the past discussions. There was additional discussion about reversing priorities to address prevention before compensation.

One member observed that the establishment of joint coexistence plans should be a farily simple undertaking, noting that the legal issues around insurance rates would need to be hashed out. Noting his discomfort with some of the other elements of recommendation I, he expressed support for the establishment of such plans.

Another member suggested that the recommendation should include an exhortation to seed companies to include language in contracts for seed about making coexistence a priority. Including such language could help to bridge differences about the need for voluntary versus mandatory measures. Two other members expanded on this idea, one noting that a contract could include measures growers should take if they use GE technology, and the other suggesting that contracts might serve as an educational vehicle, both offering sample elements for a good coexistence plan and noting a grower’s eligibility for financial benefits if a plan is followed.

There was additional discussion on what might be included in joint coexistence plans, e.g., whether they might include not only planting date coordination but also shared responsibility for planting buffer zones, etc., and whether organic and other IP growers should be obliged to pay for their “coexistence insurance.” The question was raised as to what would happen if an organic grower has a neighbor who refuses to join him/her in a joint coexistence plan. Some argued that actuarily sound insurance needs to charge more for riskier farming operations. One member argued that the current price surcharge for crop insurance for organic growers is not based on actuarial data, and that organic farmers are “considered riskier unless proven otherwise.” Some other members acknowledged the difficulties in setting the parameters for crop insurance for organic producers, with one member noting that insurance rates get adjusted as experience increases. Several members noted the requirement in organic contracts that members demonstrate that they have contacted their neighbors to inform them about their production. Discussion ensued about the kinds of interactions that farm neighbors have in the countryside and whether neighbors are receptive to changing their practices to accommodate neighbors. Another member noted that plans for temporal isolation of corn planting don’t always work, because the time of pollination can be affected by adverse weather.

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There was discussion about the potential role of the regulatory process in addressing some elements of coexistence. Different points of view on the advisability of modifying regulations to help accommodate some coexistence concerns were offered. One member asked whether there would be support for suggesting that the Secretary release recommendations for promoting joint coexistence as part of the deregulation process for new GE events. Another member noted that such recommendations were released at the time of the deregulation of GE alfalfa in early 2011. Another member did not support making coexistence in effect a new regulatory requirement, but did offer that USDA could be asked to consider potential new products and proactively conduct research on coexistence measures separate from the regulatory process.

One member noted that the report should indicate that the work needed on coexistence has not been completed, that the committee offered its best thinking but that other work in particular areas still needs to be done. Dr. Schechtman supported the idea of voicing enthusiasm for future work, but reminded members that the committee does not get to set the charge for its future work.

The Chair summarized discussions by indicating that option I would be used as a base, borrowing elements from option 3 relating to joint coexistence plans and incentives, including reference to the need for an insurability trigger without indicating a specific number or numbers, and including encouragement to seed providers to add coexistence language in their technology agreements. In response to a member question, it was noted that the package already included reference to the need for additional data relating to actual unintended presence-related economic losses by farmers.

The Chair offered to provide a revised text incorporating these elements by the following morning for members to review. In response to a question as to why option I rather than option 3 was being used as the base, the Chair noted that what would be provided would be a new option. One member questioned whether the concept of a pilot program had been lost in creating the new package, and questioned whether additional research was needed to establish that there had been economic losses. Another member noted that setting up a pilot would be a given, in order to gather data to price an insurance product correctly. Another member observed that data is essential, but that USDA should not need to wait until all data is in to begin work. He suggested that reference to data should be in the background if not in the actual recommendation text.

One member questioned why a paragraph relating to pilot programs in the introduction to the compensation mechanism section was in brackets. Dr. Schechtman noted that the inclusion of that paragraph depended on the outcome of the current discussions.

There was continued discussion about the order of data gathering and pilot program establishment, or whether the two events should be concurrent. One member observed that it made no sense to launch a pilot program to gather data to see if a pilot program is needed.

One view was that the language around data requirements should be adjusted to note that data gathering need not be entirely sequential to a pilot program: the pilot may be the best way to gather some data. If a compensation mechanism is needed, a pilot program may help in that regard.

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The Chair indicated that in his view the revised option should indicate that data is needed and that a pilot program could be established based on data. He acknowledged the sensitivities around the establishment of a pilot program and indicated that the AC21 would be offered a revised draft the following day. (Note: the revised draft text is provided as Appendix II attached to this summary).

V. Public Comments

The AC21 Chair noted that public comments are provided as stipulated under the Federal Advisory Committee Act. Comments are to be no longer than 5 minutes in length and are not intended as dialogues between commenters and members of the committee.

Note: The complete versions of each of the public comments will be posted on the Committee web page and are also included in the meeting transcript.

Sharon Perrone and Abigail Seiler, on behalf of Colin O’Neil from the Center for Food Safety, jointly spoke and expressed concern at the narrow approach offered in the AC21’s draft final report. They advised that “preventing GE contamination” should be the primary goal of the USDA biotechnology policy and the focus of the AC21’s report. They opposed the assumption that such “contamination” is an acceptable cost of doing business for non-GE producers, which she argued is implicit in the compensation approach. They made a number of recommendations, including the establishment of mandatory best practices for GE growers, the creation of a “GE contamination registry,” and that USDA should acknowledge that liability for GE contamination should rest with the GE seed patent holder.

Liana Hoodes, from the National Organic Coalition, described the composition and goals of ther organization and expressed disappointment with the narrow scope of the AC21’s efforts. She noted the prohibition of the use of GE technology in organic production and the impacts of GE presence on organic farmers, and questioned the appropriateness of asking organic farmers to purchase insurance to protect against unwanted GE presence. She argued for mandatory, rather than voluntary, measures, and urged AC21 members not to join in consensus on the current draft report.

Genna Reed, from Food and Water Watch, expressed disappointment with the current AC21 draft recommendations, and argued that coexistence requires preventing of GE gene flow. On this basis, she argued for a moratorium on new GE approvals until adequate measures to accomplish that are established. She suggested that requiring those being impacted by unintended GE presence to purchase crop insurance is neither fair nor feasible, but that instead technology companies should be asked to develop a compensation fund for affected farmers. She argued for more stringent USDA regulation of GE crops, and offered the view that the status quo is unacceptable.

Scott Sinner, from SB&B Foods, Inc. and the Northern Food Grade Soybean Association, a group of producers, processors, and marketers of IP non-GE soybeans in the upper Midwest, suggested that developing a crop insurance mechanism for compensation is unnecessary to his industry and could be

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harmful, reducing the incentives for IP producers to follow contract specifications. He supported the role of grower education and the option of providing incentives for neighbor-to-neighbor cooperation, and offered a preference for option 3 in Recommendation I. He questioned whether the seed industry has done enough to ensure the availability of appropriate seed for non-GE producers and supported the elements of Recommendation V focused on the seed industry. He further noted that not all consumers accept the contention that GE products have been scientifically reviewed and found to be safe.

Michael Sligh, from the Rural Advancement Foundation International, expressed appreciation for the difficult work of the committee. He urged that in its definition of coexistence, the AC21 incorporate a phrase about one marketing system or marketing stream not imposing on others. He expressed support for additional research and farmer education, but indicated that education on contracts should apply to GE producers as well. He argued for more research into the level of unintended GE presence in seed supplies. He argued for a broader look at the impacts of GE technology, and suggested that the public should not be asked to pay for insurance products. To do so, in his view, might compromise existing farm programs.

Barbara Glenn, from CropLife America, expressed concern with the establishment of a compensation mechanism. She noted the potential impact of the AC21’s work on the crop protection industry and urged the AC21 to recognize that no compensation mechanism is needed. In the absence of such a recommendation, she urged the committee to adopt option I for Recommendation I, dependent on actual evidence of economic losses. She urged that the option reference the need for concurrence by other federal agencies in interagency consultation prior to going to Congress for the appropriate authority to establish such a mechanism. She further recommended that the committee not endorse the establishment of any specific insurability triggers or marketing standards in the report.

Kristina Hubbard, from the Organic Seed Alliance, noted that her organization had reached out to seed companies that service the organic farming community, who noted the expenses that are involved in testing and providing seed with appropriate quality for producers. She described some of the difficulties facing such seed companies and indicated that seven out of ten such companies had reported having incurred “financial harm” from unwanted GE materials in their seed. She recommended that USDA place a moratorium on the deregulation of new GE crops at least until a comprehensive approach to prevention and compensation is established, including the establishment of a compensation plan funded by GE patent holders. She also recommended that USDA conduct a comprehensive analysis of “existing contamination” at the seed level.

Chris Ryan, from Beyond Pesticides, expressed appreciation for the hard work of the AC21 but argued for giving greater attention to the prevention of unintended GE presence and a more balanced allocation of responsibilities among the parties involved. He argued that pollen drift constitutes a form of trespass that should be addressed by law. He suggested that greater emphasis on enforceable measures for preventing contamination would be appropriate, though the improvement of neighborly cooperation is seen as a positive step.

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Nick Maravell, a Maryland organic farmer, expressed an unwillingness to participate in any of the compensation options under discussion, and argued that non-GE farmers and the general public should not be asked to pay for damage created by another party. He supported recommendations concerning maintenance of seed purity and research for the promotion of effective coexistence. He suggested that if the promotion of dialogues between farmers was a viable strategy to effect coexistence, the AC21 would not be meeting on the topic. He noted that farmers’ holdings can be scattered and landlords distant. He expressed concern tha GE technology, like other powerful technologies, would eventually be found to have significant problems. He argued for effective mechanisms to prevent unintended GE presence rather than compensation, and recommended that the AC21 ask the Secretary for a new charge to recommend a comprehensive strategy for coexistence.

END OF DAY ONE

Day Two discussions

VI. Reflections on the previous day’s discussions and continued discussion of draft recommendations 2-5

Mr. Redding thanked the committee for good discussions, noted the time constraints the committee is under due to travel arrangements, and indicated that Dr. Schechtman had prepared a revised version of Recommendation I (and some revisions to Recommendation 3) containing the elements noted the previous day that would be distributed to members shortly. He noted the great progress that had been made at the meeting, and thanked members for staying engaged to help American agriculture. He indicated that the next discussions would address recommendations 2-5, plus definitions, especially the definition for coexistence, and consider a title for the report. He noted that a member’s comment about offering suggestions for a future charge had not yet found consensus. The discussion turned to Recommendation 2, on stewardship and outreach.

One member expressed the view that the call for “strengthening awareness of coexistence” seemed too general a recommendation. Another member suggested replacing “awareness” with “understanding. “ There was discussion of the use of the term “stakeholders” some liked the term, but others felt that more precision was needed. Dr. Schechtman indicated that the use of the term would be carefully examined in the report, attempting to be specific where necessary and more general elsewhere.

Members discussed whether strengthening “awareness” was too passive a concept. Some argued that one of USDA’s most important functions is in education, so the related recommendation should be very powerful to make for a strong section of the report.

One member suggested that the final two sentences of the first paragraph below the chapeau in Recommendation 2 seemed presumptuous and should be dropped. One member suggested that instead, a sentence could be added, as follows: “As experience is acquired these education measures will be fine-tuned to be regionally appropriate.”

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There was some discussion about the possibility of moving the last paragraph of the recommendation into Recommendation 3.

The Chair turned the discussion to Recommendation 3. He noted that there had been modifications made to Recommendation 3 in the “overnight text” just distributed.

One member raised concern about the use of the term “gene flow” versus unintended presence.” Dr. Schechtman indicated that he and the Chair would examine the use of the term “gene flow” throughout the document.

One AC21 member expressed concern about the proposed enlistment of conservation programs to promote coexistence in the last sentence of the draft recommendation. She argued that coexistence is not a conservation issue and that such a proposal had not been discussed by the committee. Another member disagreed, arguing that the use of conservation programs would be appropriate, and that USDA is already doing conservation measures that could be made to mesh with coexistence. Another member also expressed opposition for the use of conservation programs to create buffer strips. The Chair noted that the proposal had been made earlier by a member who was unable to be in attendance at the meeting. There was discussion of the differences between long-term conservation contracts or agreements versus agreements for an annual crop. One member expressed the view that there could be long term applications for GE crops as well.

Another member expressed the view that it would be acceptable to him to lose the reference to conservation programs, but that the other concept in that sentence, the facilitation by USDA of the development of buffer strips and zones, should be retained. One member complained that the discussion was attempting to strip away creative new ideas and retain the status quo, whereas what is called for is flexibility. On further discussion, most members agreed on the idea of retaining but separating the concepts of buffer strips and planting zones for IP crops, and also retaining a reference to conservation programs, with the proviso that the environmental objectives of those programs should not be compromised.

There was discussion about the concept included in the recommendation about USDA promoting the use of third party verification of appropriate stewardship practices. Some felt uncomfortable about the use of such verification for non-IP producers. Others felt that for their types of production, such verification efforts were already a requirement. The Chair expressed the view that this was an extension of the Excellence Through Stewardship concept discussed by the AC21 earlier. It was also noted that Farm Service Agency representatives and crop insurers could serve as third party verifiers, and that foreign buyers of U.S. crops also often require third party verifications.

VII. Discussion on revised Recommendation I

The Chair returned discussion to the new draft option for Recommendation I, which had been drafted overnight. One member expressed appreciation to the writers for having prepared the new option, and indicated that the first paragraph was fine, but that the second paragraph might need to be made a bit

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less specific. He indicated, however, that he felt that it had captured the middle ground and might be able to attract support. In response to the Chair, he indicated that he could support the new language.

One member suggested that “GE” should be removed from the phrase “unintended GE presence” in the first sentence. Another member suggested that without the reference to GE material, the phrase was meaningless. Dr. Schechtman suggested that unintended presence might be defined broadly, with the clarification that it includes GE and other material that may affect the value of an IP crop. Another member objected, noting that the topic of discussion over the past year had not been blue corn versus white corn.

Another member referred to the sentence on the sunset of pilot programs in the second paragraph and suggested that the sentence end right after “sunset automatically.”

The issue of possible reference to “GE” in “unintended GE presence” was again raised, and one member noted that the scope of the recommendation had been expanded to all IP producers. Dr. Schechtman inquired whether that would mean that data on economic losses by IP producers was to be gathered with respect to all unintended presence or for unintended GE presence. Another member noted that the committee had tried to obtain data related to unintended GE presence and nothing else. He offered the possibility that the committee could suggest to Secretary Vilsack that he consider other unintended presence, but for this report the AC21 needs to stick with scope in the charge, unintended GE presence.

The Chair observed that unintended GE presence is the lead point of the Secretary’s charge, so that it needs to be referred to in this text, although perhaps elsewhere the reference might not be necessary. Another member offered the view that “GE” belongs in the first sentence because data on GE-related losses is what is being sought. That having been said, the compensation mechanism can be made available to all IP producers. Another member expressed caution that the report should not stigmatize GE production. Mr. Redding stressed that the reason the committee had been called together was to address the issue around GE presence. Another member noted that, even though she could live with the “GE” formulation, members need to be aware that the report is implying that GE crops are somehow different, and that it would be important that the Secretary understands that the goal is not to further polarize or imply that any form of agriculture is less valued or less safe.

One member offered the view that the costs for purchasing “coexistence insurance” should not fall all on one side of the fence and noted that in her view, the revised recommendation did not offer compromise on this point. The Chair noted that costs had been split, because of public investment, a solution which may not be ideal but nonetheless does share costs. The Chair suggested that this is indeed a compromise solution.

Another member disagreed, arguing that under the proposal, one group of stakeholders would not be absorbing any cost, and that the argument that everyone would be contributing through taxes is not relevant. She expressed the view that one party would not be bearing costs but would get a benefit through “preferred status” on existing crop insurance. She noted that the text as it now reads would only grant “preferred status” to GE producers. She further observed that there is already a surcharge for IP producers to obtain crop insurance and suggested instead that the proposal should offer

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“coexistence insurance” for IP producers without a surcharge. A member disagreed with this suggestion, noting that the cost of insurance is related to the price paid for the crop produced and noted that a great deal of compromise had already been offered.

The Chair suggested that the report recommend that the question of IP surcharges be further considered. One member noted that surcharges often go away with time. Dr. Schechtman observed that two surcharges are under discussion here: one for crop insurance in general owing to the increased value of IP product, and the other to cover unintended presence. Another member noted that insurance is provided to mitigate risks and comes with associated costs. Therefore, surcharges cannot simply be removed, but a recommendation could be made that surcharges should be reviewed. Dr. Schechtman asked whether the AC21 might recommend that USDA make efforts to defray costs for IP producers. The previous speaker thought that was a good middle ground. There was continued discussion on this issue, on how much compromise had been offered to date, and the Chair recommended that the report should suggest that the Secretary review potential inequities in assignment of costs. One member cautioned that the report should not go into too much detail on the matter, because the Risk Management Agency will need to address all the actuarial issues if such a mechanism goes forward in any case. Another member urged that incentives be provided not only for GE farmers to participate in coexistence plans, but for other non-GE farmers to do so as well.

A member reminded the committee that money is not the sole issue. Organic farmers would be getting value if they can grow organic corn where they couldn’t previously because coexistence plans are now in place. That new value could offset insurance surcharges. Another member indicated that it was important for her that the report highlight the desired outcome that compensation is unnecessary because adequate measures are in place to prevent unintended presence. She stressed the importance of adequate incentives for GE producers to participate. The Chair noted that what would be offered in the report is a whole package of items, and that the report would stress up front that prevention of unintended presence would be the best outcome. One member noted that technology will help to facilitate prevention, and another noted that the overall package contains pieces that will help improve the situation.

One member noted that the text needed to be revised so that incentives could be offered for the development of coexistence plans when IP producers work with other IP producers.

One member suggested that the recommendation address whether the Secretary currently has the authority to implement the recommendations. Another member reminded the committee that the Secretary had instructed the AC21 not to worry about whether existing authority is adequate, and further, that legal authority can be subject to interpretation, and can change with different Administrations. One member offered a general statement for inclusion about the potential need to seek authority for various actions, and no members opposed the statement.

One member noted that offering preferred status under conservation programs as a potential incentive could be a very large benefit, and might create resentment among other farmers who were not eligible. The Chair suggested that the words “if appropriate” be added. He also recapitulated his understanding

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of what the changes would include, namely the addition of language around addressing the equity of premiums and retaining the phrase “unintended GE presence” in the first sentence.

VIII. Discussion of remaining recommendations

The Chair turned discussion to Recommendation 4. One member questioned the purpose of the last portion of the recommendation, to gather data from seed companies on unintended GE presence in non-GE seed supplies, noting that for those companies, seed quality is their business. She expressed the view that such a step would be overly burdensome. Another member noted that such data would help in the development of better coexistence plans , adding that for GE growers there is lots of high quality seed, in contrast to that available for non-GE growers. There was additional discussion about whether those concerns were already addressed in Recommendation 5, but some members felt that they were not. One member suggested changing “organic” to “non-GE’ in the statement.

There was further discussion of the importance of pure seed for various types of farming operations. It was noted that commodity producers generally do not have the same starting purity requirements as IP producers. At the same time, those commodity producers do not wish to incur the added costs that seed of higher purity may incur, whether or not they are growing GE crops. There needs to be some sensitivity to this fact in crafting a revised recommendation.

One member observed that the seed industry knows very well the purity of the seed in each of its lots, and spends a great deal of money for that information. Another member observed, however, that there is no common definition on non-GE seed among seed companies, and information about each company’s interpretation of “non-GE” is hard to obtain. One member noted that her company participates in official seed certifying activities and produces pure seed, to meet the contract specifications of the buyers. Another member noted that his company offers information describing purity within a range of percentages.

Mr. Redding turned the discussion to Recommendation 5.

One member expressed the view that the recommendation was too narrow, in that it does not set up a plan in place for every species with GE varieties to ensure that non-GE varieties are preserved. Another member predicted that over time, most breeding would start from GE varieties, and non-GE varieties would require specific breeding activities. He suggested that the order of the paragraphs should be altered, with the last paragraph becoming the chapeau paragraph in bold type. Dr. Schechtman suggested a modification of that idea, with the sentence tasking the NGRAC currently in the last paragraph as the leadoff, followed by the second sentence currently in bold. The first sentence currently in bold and related material about germplasm banks would become a sub-paragraph. This approach to reorganization of the recommendation was supported by the group.

It was also suggested that “Organic Seed Finder” be capitalized, and that a similar seed finder database for non-GE seed be established.

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Dr. Schechtman noted, in reviewing all the proposed changes and sensitivities, that judgment calls in the drafting of a final report will remain, e.g., when to use “unintended presence” versus “unintended GE presence,” when to use “identity-preserved markets” versus GE-sensitive markets,” etc. He indicated that he and the Chair would do their best to find the appropriate choices.

One member noted that there had been excellent conversation on coexistence, and members had become sensitive to the sensitivities. She added that members should be proud of the work that they have done, and expressed confidence that Mr. Redding and Dr. Schechtman would “thread that needle.” The Chair added that the product would not be perfect, but that all had done a lot of good work.

IX. Final discussions on body of text, title, etc., and wrap-up

The Chair checked with members on their departure schedules and then listed the next two topics for discussion: is anything major missing from the report? And are there thoughts or suggestions about any structural changes needed in the report?

One member expressed the view that the report should be framed as one part of a comprehensive strategy.

The Chair inquired about the drafting of an Executive Summary, for which there was currently only a placeholder in the draft. Some felt that one would be useful, while others thought that it would leave too much context out or discourage readers from reading the whole report. In the end, it was decided not to draft such a summary, but that a Table of Contents instead would help to point readers to information of interest.

The topic of a numerical trigger was again raised, and whether there needed to be additional discussion about why no recommendation was made in that area. One member noted that in the Secretary’s most recent remarks to the AC21, he had indicated that the committee did not need to concern itself with that detail. The Chair noted that the concept of a trigger would be discussed in the report, without a numerical value being offered.

There was discussion about whether to group all the recommendations together. In the end, it was decided to leave them where they are in the current text, but to highlight them, perhaps by using a different font color, to make them stand out. One member suggested that adding transitional paragraphs would help to distinguish background, context, and recommendations.

The AC21 discussed whether to revise the definition of “coexistence.” One member felt that the current definition described the status quo, saying nothing about cooperation and respecting each other’s choices, and argued that the definition should refer to “cooperative concurrent cultivation” and allude to a relationship between individuals. Another member thought that the word “successful” should be added to the phrase “concurrent cultivation” in the definition. Others noted that definitions for success may differ. Several other additions were also proposed, but in the end, it was decided to leave the definition for “coexistence” unchanged.

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Members considered the two alternative definitions proposed for GE in footnotes, and opted to employ the second alternative, adapted from the definition used by Codex Alimentarius.

One member reiterated an earlier comment about the need to be more specific when referring to “industry” or “stakeholders” in the report. Another member questioned whether members would have the opportunity to review definitions used at the time that review for typographical errors will take place. Dr. Schechtman said that would be fine, since definitions refer to matters of fact, a category of changes that would be allowed to be offered at the same time.

The discussion turned to a title for the report. After a few potential titles were offered, it was decided that the report would be entitled, “Enhancing Coexistence: A Report by AC21 to Secretary Vilsack.”

Dr. Schechtman congratulated the committee on quickly choosing a title. He reviewed the timeline for the final steps of completing the report, and noted that after the report was completed, there would be a meeting at which the Chair would present the report to the Secretary. On that same day, the report would be released to the public. That event would happen sometime after November 8. One member inquired whether members could attend that event. Dr. Schechtman replied that there would not be funds to cover travel for members, but that the event would be open to those who wished to come.

It was noted that members’ final comments on the report should be shared with other committee members. There is an expectation that the press may contact members for their views so that accurate information will be needed by all. The question arose as to whether, prior to presenting the report to the Secretary, the draft could be shared within the organizations members may represent. Dr. Schechtman indicated that members could report to their constituents what they thought was agreed to by the group, but that, as a courtesy, the final document should be held until its official presentation to the Secretary.

It was also noted that the final report would include a list of all AC21 members and their affiliations.

The Chair checked with committee members whether any additional business remained. He thanked everyone for being constructive and helpful, expressed his sense that a good product had been developed, and that the committee had come a long way over the meeting. He observed that the report will not please everyone but it will move the conversation forward and indicated that he was proud of the result, even if it is a “qualified consensus.” He thanked Dr. Schechtman and the USDA team helping in the process. Members thanked the Chair and USDA for their efforts.

The Chair noted that the process had helped educate him and gave him new respect for what everyone does in agriculture. He indicated that the spirit of all those activities needs to be captured in the report.

Dr. Schechtman thanked members for their flexibility and hard work. He noted that the report contains things for each member to dislike. He indicated that he could not predict the final level of consensus but was very encouraged by the outcome of the meeting.

The Chair wished safe travels to all members.

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END OF MEETING

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Appendix I: Revised Draft Chairman’s Report for discussion at August 27-28, 2012 AC21 Plenary Session

August 17, 2012

EXECUTIVE SUMMARY?

INTRODUCTION:

A. Committee Charge from the Office of the Secretary

The AC21 has been charged by the Office of the Secretary with addressing the following questions:

4. What types of compensation mechanisms, if any, would be appropriate to address economic losses by farmers in which the value of their crops is reduced by unintended presence of GE material(s)?

5. What would be necessary to implement such mechanisms? That is, what would be the eligibility standard for a loss and what tools and triggers (e.g., tolerances, testing protocols, etc.) would be needed to verify and measure such losses and determine if claims are compensable?

6. In addition to the above, what other actions would be appropriate to bolster or facilitate coexistence among different agricultural production systems in the United States?

These were provided to the AC21 with the proviso that the Committee should address the first two questions prior to addressing the third.

After deliberations and careful consideration, the Committee expanded the scope of the Secretary’s charge questions to include all identity preserved1 (IP) crops.

B. Definition of Coexistence2

1 An “identity preserved” crop is a crop of an assured quality in which the identity of the material is maintained from the germplasm or breeding stock to the processed product on a retail shelf.2 This definition was modified from a previous working definition of coexistence adopted in a 2008 paper written by an earlier AC21 committee, which is cited in the “Methodology” section below.

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Coexistence, for the purposes of this paper, refers to the concurrent cultivation of conventional3, organic4, IP, and genetically engineered (GE)5 crops consistent with underlying consumer preferences and farmer choices.

.

C. Methodology

The AC21 has met 5 times to discuss the current charge. The Committee considered presentations from outside experts and USDA representatives, and listened to comments from members of the public on the Secretary’s charge at each of its plenary sessions. In addition, at its first meeting in 2011, the AC21 established four working groups to help frame information for the full AC21’s consideration on four relevant subtopics, namely, Size and

Scope of Risks, Potential Compensation Mechanisms, Eligibility Standards/Tools and Triggers, and “Who Pays?” The Committee also had the benefit of the work of a previous AC21 committee, namely a report entitled, “What issues should USDA consider regarding coexistence among diverse agricultural systems in a dynamic, evolving, and complex marketplace?” All of the presentations, public comments, meeting summaries from plenary sessions and working group meetings, and earlier reports of the AC21 are available on the USDA AC21 web page. This paper reflects the broad range of input received and is shaped by the broad collective substantive expertise of the Committee members. This report is intended to capture areas of both agreement as well as areas of disagreement among members, and provides a set of concrete recommendations for USDA action. This report was initially drafted by the AC21 Chair and Designated Federal Official based on Committee discussions, with input and review during the report finalization process.

OVERALL CONTEXT FOR THIS PAPER

All members of the AC21 acknowledge the premise that American agriculture production practices are diverse in nature and the need for enhancing coexistence between all sectors of agriculture is important. American farmers have the right to make the best choices for their own farms, including the choice to grow genetically modified crops, the choice to grow IP, non-GE, or organic crops, to choice to practice different agricultural management systems,

3 “Conventional” crops in this paper refer to crops produced from non-GE crop varieties that are not produced in compliance with the requirements of the Organic Standards Act. They may be grown with the intent of entering the general commodity stream, in which case they may be mixed with GE varieties of the crop, if commercial GE varieties exist; or they may be grown under identity preservation conditions and enter the market specifically as non-GE products.4 “Organic” refers to those crops or products produced in compliance with the Organic Standards Act.5 “Genetically Engineered” [refers to organisms, or products derived from them, produced through recombinant DNA processes] [is meant to include biotechnology-derived plant products derived by the application of 1) in vitro nucleic acid techniques, including recombinant deoxyribonucleic acid (DNA) and direct injection of nucleic acid into cells or organelles or 2) fusion cells beyond the taxonomic family, that overcome natural physiological reproductive or recombinant barriers and that are not techniques used in traditional breeding and selection. This definition of modern biotechnology has been adopted by the Cartagena Biosafety Protocol under the Convention on Biological Diversity and by the Codex Alimentarius Commission. ]

.

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and the choice to grow crops with new functional traits. It is important that every American farmer is encouraged to show respect for their neighbor's ability to make different choices.

All U.S. citizens benefit from agriculture: consumers benefit from diverse food choices, export markets support farmers and the overall economy, and the success of agriculture leads to strong rural communities.

For decades now, a hallmark of U.S. agriculture has been the ability of American farmers to pursue diverse cropping systems and respond to diverse and changing consumer and market demand ranging from globally competitive commodities to high-value identity-preserved and specialty crops. The diversity and dynamism of our industry would not be possible if not for the past success of coexistence.

Coexistence is not a new practice in agriculture, nor has it failed in recent times. Farmers operate within communities and most work with their neighbors towards their common success. Rather, the number and scope of opportunities for differentiated products and markets have increased and mechanisms for precisely evaluating the composition of products have become widely used as market tools. In this situation, even small deviations from farming best practices could result in crops (their own or their neighbors’) falling out of market or contract specifications.

The AC21, during its deliberations, considered information from diverse sources within the agricultural community—organic and conventional growers, seed suppliers, the biotechnology industry; and a large organic canola processor—that demonstrated the diversity of risk mitigation tools that have evolved and improved over time and are currently being used successfully. The Committee also heard of new initiatives from members of the organic and agricultural biotechnology industries that demonstrate continued development of tools and approaches to manage potential economic risks as technologies and markets evolve.

Technological developments as well as increased market demands underscore the need to ensure that farmers are made aware of market needs, of the latest technologies for managing potential economic risks, and of the role that each farmer can play in supporting agricultural production in their community.

All participants in the development, breeding, marketing, and management of crop production need to be involved in making coexistence work.

All members of the AC21 acknowledge the benefits that come from coexistence. As a committee we recognize that it is not constructive to argue over who gets the most benefit. Similarly, all farmers face risks in their farming operations, no matter which production methods they use. There are risks to farmers, big and small, and to the companies serving those farmers.

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The discussion of coexistence focuses on the choices of farmers and consumers among methods of production and legal products. In particular, GE products in the marketplace are legal products which have been evaluated by scientific experts and regulators, and have been determined to be as safe for humans and the environment as conventional crops. The unintended presence of such materials in others’ crops should not be a topic for assigning fault or blame. The AC21 is operating under the assumption that farmers are generally acting in good faith, although sometimes problems occur. Prevention of problem-s is preferable to dealing with negative consequences further downstream, either on farm or in the marketplace.

Although much recent discussion on coexistence relates to the introduction of agricultural biotechnology, it is important to recognize that the presence of genetically engineered crops does not create risks that are novel in agriculture. The principles of coexistence and the need to manage risk and preserve the integrity of crops apply to all agricultural production, and are particularly important in any identity-preserved (IP) cropping system. Examples of successful coexistence in IP production include the cultivation of specialty crop varieties, such as sweet corn and popcorn, and practices within seed production.

There has been increasing diversification in agricultural production in recent years. The growth of specialized identity-preserved production niches has opened opportunities for value-added products which have contributed to job creation and the health of rural communities. For example, according to USDA’s Economic Research Service, direct farmer-to-consumer sales increased 77 percent between 1992 and 2007 to a total value of $1.2 billion dollars, and the number of farmers participating in such sales increased by 58 percent over that time.

Because of the growing diversity of coexistence challenges and need across all of agriculture for cost-effective, risk management options, the AC21 believes that it is appropriate to address in this report coexistence considerations and potential compensation mechanisms and other tools not only for non-GE and organic producers, but for all producers. This inclusive approach for the enhancement of coexistence will counteract divisions within agriculture and foster learning and collaboration across sectors.

The AC21 recognizes that any recommendations it makes must also take into account potential economic impacts of those recommendations on agricultural innovation and market competitiveness, both domestic and international. U.S. farmers have long led the world in overall agricultural productivity and diversity and have established a strong economic advantage in the production of both commodity crops and specialty crops. President Obama’s National Bioeconomy Blueprint released in April 2012 emphasized the economic significance of agriculture:

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Technological innovation is a significant driver of economic growth, and the U.S. bioeconomy represents a growing sector of this technology-fueled economy. Agriculture, one of the country’s largest industries, is heavily based on advances in biological research and development (R&D).

In this context it must be recognized that technological innovations and diverse market diversity have become key drivers of increased productivity and product quality for all forms of American agriculture.

In its examination of the charge provided by the Secretary, the members of the AC21 have concluded that the responses to all three elements of that charge are linked. No member of the AC21 believes that simply putting in place a compensation mechanism to address economic losses to farmers arising from unintended presence of GE or other material would completely eliminate such unintended presence and strengthen relations between neighboring farmers.

Members agree that a better situation would be where good stewardship leads to effective coexistence, with compensation for unintended presence-related losses necessary only in the rare occurrence when stewardship practices prove insufficient.

To enhance neighbor-to-neighbor relations and interactions and to strengthen farmer stewardship, there are important actions that can be taken to bolster coexistence under element 3 of the charge, which would lessen occurrences of unintended GE presence with financial implications and promote a spirit of common purpose among American farmers.

Therefore, the AC21 will present a package of recommendations for USDA-led activities intended to: educate farmers (and other interested stakeholders) about coexistence and the importance of coexistence and their roles, particularly with reference to stewardship, contracting, and attention to gene flow, in making it work;

o provide farmers with tools and incentives to promote coexistence through its farm programs and coordination with other entities;

o conduct research in a range of areas that are integral to understanding the current state of coexistence and gene flow management as well as the development of improved tools and practices to manage coexistence in the future;

o provide increased assurance about the quality and diversity of U.S. seed and germplasm resources; and

o provide a framework for the establishment of a system of compensation for actual economic losses for farmers intending to grow identity-preserved products [if the Secretary determines that there are adequate loss data to justify such a step][ DELETE][on a regional pilot basis, subject to strict parameters].

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COMPENSATION MECHANISMS

The AC21 has wrestled with identifying and quantifying actual economic losses to farmers resulting from unintended presence of GE material in their crops. It is difficult to get direct data on actual farmer losses suffered for a variety of reasons, including the fact that this data is often confidential and farmers may be reluctant to disclose that their products may sometimes not meet market demands. There are, however, clear data that some consignments of identity-preserved and organic commodities have been tested and found to contain GE material in amounts that exceed de facto market standards. Such rejected shipments pose problems for those farmers whose loads have been rejected. The USDA supports the smooth functioning of the marketplace and the maintenance respectful relationships among the various participants in agriculture.

Members of the AC21 are not in agreement about the extent to which a systemic problem exists and whether there is enough data to warrant an appropriate compensation mechanism to address it. Members recognize that there are unintended GE materials found in commercial products, but differ in their assessment of the significance of unintended presence, the severity of actual economic harm and whether the such occurrences are increasing, decreasing, or remaining the same. Some AC21 members believe that there is not adequate evidence of economic losses by farmers at this time to justify the establishment of a compensation mechanism.

Any compensation mechanism that may be put in place that is perceived by one segment of agriculture as placing unfair burdens on that sector will only divide agriculture. Most AC21 members agree on the importance of having broad participation, access, and responsibility for maintenance of any compensation mechanism, should one be deemed necessary, if such a mechanism is instituted alongside increased stewardship and outreach activities.

In discussions on potential compensation mechanisms, the AC21 considered three types of potential mechanisms: (1) a compensation fund, which might be funded by technology providers, by farmers, or by the entire food and feed production chain; (2) a crop insurance-type mechanism, which would likely involve both public financing and farmer choice to purchase the insurance; and (3) a risk retention group, which would essentially be a self-insurance tool that could be purchased by those farmers at risk of economic losses (analogous to extant insurance mechanisms for industries like the trucking industry, private campgrounds, etc.).

The AC21 also discussed the historically important role of State agricultural mediation services in resolving farmer-farmer disagreements in many States. Members noted that, while such services did not constitute another “compensation mechanism” per se, they could be an important tool to aid the resolution of disagreements. Though such services have not been widely involved in disputes related to gene movement to date, the AC21

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notes that they could play an increasingly important role in helping to address gene flow issues without resorting to a formal, Federally-sponsored compensation mechanism.

Each of the three potential types of mechanisms has its own set of advantages and disadvantages, both administrative and perceptional.

Some AC21 members acknowledged that, in terms of ease of administration and overall simplicity, a general compensation fund might be best, but the approach posed significant and unacceptable downsides for many AC21 members. Many AC21 members felt that burdens would be unfairly distributed under such a system and also felt that establishing such a fund would suggest to consumers or trading partners that there was something unsafe about the products produced by the entities funding the mechanism. For some AC21 members, however, this approach would have been their preferred option.

The self- insurance option, i.e., the establishment of a risk retention group to cover losses by the affected parties, would offer the advantages of being focused on those suffering the losses, which at the same time was a disadvantage in that it required no involvement by any other parties whose cultivation or management practices may have directly or indirectly contributed to those losses. In fact, some members argued that a risk retention group should not be considered a “compensation mechanism” at all, since it would involve participants in essence paying themselves when financial injury occurred. Additionally, no actions by USDA would be necessary to establish such a mechanism because insurance laws currently allow the affected parties to do so on their own.

A crop insurance-type mechanism would have the advantage of being a familiar tool for many farmers, and could build on existing structures administered by USDA’s Risk Management Agency and its Farm Service Agency. As a mechanism that would incorporate both public and private efforts—i.e., some level of public funding plus insurance instruments administered by the private sector, as well as voluntary insurance purchase by those farmers potentially affected—it is an inclusive approach.

In considering types of potential compensation mechanisms, the AC21 evaluated the potential mechanisms for their impacts on various sectors and interests related to agriculture. These discussions were based on the initial presumption that eligibility for compensation would be limited to farmers suffering actual and documented economic losses as a result of unintended GE presence and would not be extended to all farmers producing identity-preserved crops. For the most part, there was not adequate time to revisit these discussions incorporating a broader set of potentially eligible producers.

Discussions included consideration of potential costs and benefits to farmers, to technology providers, and to consumers, and impacts on trading partners, on litigation, on conflict avoidance, and on the development of incentives for the development of technologies to prevent risk.

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In many instances, it was difficult to separate consideration of potential impacts or costs and benefits of a particular compensation mechanism from the question of who would pay for or fund it. This in turn meant that few conclusions were reached with respect to these parameters that were held by all, or most, AC21 members.

A few general themes emerged, though. Most members felt that putting in place any sort of compensation mechanism would tend to lessen motivation that farmers might have to bring legal action against their neighbors as a result of unintended GE presence (recognizing that there have been few if any such lawsuits in the U.S. to date), but would have little impact on legal challenges that might be brought against USDA regulatory approaches or actions relating to GE products.

Some members suggested that a private insurance entity responsible for administering any insurance mechanism, having paid out a claim, might have incentive to strengthen measures taken by policyholders to prevent risk, or even to try and recover those costs from other farmers whose actions led to the economic loss. The latter train of action could make additional liability coverage, as opposed to property protection coverage, for farmers more attractive for some farmers. Most farmers currently have general liability insurance for their operations, often through their Farm Bureaus, but while that insurance typically covers negligence, it may not cover impacts of unintended presence of genetic material on a neighbor’s crop.

The AC21 discussed potential impacts on trade relations upon adoption of any of the three potential compensation mechanisms. The entire gamut of potential views was expressed: some members felt that establishing a compensation mechanism would send a signal to purchasers of U.S. organic and non-GE products that there are problems in how the U.S. produces those products, some expressed the opinion that effects would be neutral, and some felt that it would be reassuring to our trading partners in GE-sensitive markets that steps are being taken to ensure containment. All members felt, however, that if a compensation mechanism were to be instituted, that attention needed to be given to potential impacts on trade.

The AC21 also considered what types of standards USDA might need to develop to enable a compensation mechanism to work to address gene flow-related economic losses absorbed by farmers producing non-GE, organic, or, more generally, identity-preserved crops. Most members felt that a few eligibility standards would need to be set, to demonstrate: prior farmer intent to produce an identity-preserved product; the use of “best” management practices (or at least, adequate management practices) in the cultivation of the crop; that the contract requirements under which the product was produced were reasonable and achievable; and that an actual loss occurred due to unintended presence of genetic material from another related crop.

There was considerable discussion about the meaning of a “reasonable contract” for producing an identity-preserved product, both in the context of farmer responsibility for

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meeting the agreement to which he or she has signed on, and in terms of whether there should be a limit set as to what types of contracts would be insurable through government-sponsored insurance. There was no agreement within the AC21 about the advisability of setting such a limit.

Some AC21 members believe that the AC21 should recommend that USDA set an insurability trigger or triggers with respect to unintended GE presence in other products: only contracts allowing GE presence at the trigger level or higher would potentially be allowed for insurance coverage, all other requirements being met. Conversely, contracts requiring a lower level than a set trigger would not be eligible for insurance coverage. To proponents of such a trigger, setting such a trigger would provide a benchmark for planning and for behavior of market participants. These members note that markets have adopted a variety of stances toward GE traits, and some do not address the issue at all. These members further note that setting an insurability trigger of 0.9% GE content for non-GE corn and soy products would address the concerns of many who seek to avoid GE product, whether purchasing non-GE or organic products, and would provide U.S. producers open access to almost all GE-sensitive international markets. It would not preclude parties from contracting at lower levels than the “insurability trigger” - as long as they accepted the responsibility for unintended GE presence at levels below the trigger.

Other AC21 members worried that setting an “insurability trigger” would become a de facto low-level presence threshold for GE materials, which could be misinterpreted by consumers or trading partners as implying a safety threshold. Given ongoing debates, in these members’ view it is critical that no USDA actions be recommended that might suggest that the U.S. government believes that legal GE products produced in the U.S. might under some circumstances be unsafe. Additionally, in their view, setting such a trigger would artificially distort functioning markets, which can naturally evolve to meet the distinct needs of different market participants and enable value capture.

AC21 members recognize that, were USDA to decide to establish a compensation mechanism, the process may require seeking new legislative authority. Developing such a mechanism, developing appropriate actuarial information, and proposing and finalizing regulations, could be a long and complex process. However, the process might be positively affected by a high degree of support across all stakeholders.

[One option discussed by the AC21 was a pilot or localized program designed to test out, on a smaller scale, some parameters for compensation. Although such a program might be developed somewhat more quickly, Congressional authority would still need to be sought and the effort might still take a considerable amount of time. There was not overall support among AC21 members for recommending the immediate establishment of such a test program, however.][DELETE]

Farmer support for any future crop insurance-type mechanism addressing unintended GE presence and applicable to organic and identity-preserved non-GE farming

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operations would be bolstered if additional attention is given by USDA to improving existing conventional crop insurance coverage for these operations.

Future support by GE producers for a crop insurance mechanism addressing unintended GE presence may be bolstered by also providing coverage to those farmers if they suffer economic losses as a result of unintended GE presence. Such an effort would be part of overall planning for a future with in which many types of “non-commodity” GE crops are grown.

The AC21 also discussed the fact that gene flow from some new crops that have been commercialized, or may be commercialized in the future, may potentially affect the quality of non-identity-preserved crops as well and thus affect a greater number of farmers and greater farmed acreages. Without careful management, unintended presence of some crops with so-called “functional traits” could potentially disrupt commodity streams because of the new traits they carry, even if present in very small quantities and even though the products themselves meet regulatory safety standards. AC21 members recognized that these situations might pose new challenges in the future. The AC21 did not come to any additional consensus conclusions specific to these plants but noted the possibility that in the future producers of commodity crops, including GE crops, who might suffer economic losses should such gene flow occur, might also have an interest in having gene flow-related losses insured.

The following recommendation brings the greatest support from AC21 members:

Recommendation I.

[Option I:

To strengthen the understanding of the impact of unintended GE presence in identity-preserved products, USDA should evaluate data it has gathered under Recommendation IV regarding actual economic losses by farmers who grow crops for identity-preserved markets. If the Secretary determines based on such loss data that the situation warrants development of a compensation mechanism to help address such losses, the Secretary should implement such a mechanism based on a crop insurance model. Prior to seeking authority to implement the development of such a compensation mechanism, the Secretary should take into account domestic and global policy implications, as well as the potential trade/economic implications of instituting such a mechanism. Any such insurance instrument, if created, should be made available to all identity-preserved producers on a voluntary basis for gene flow-related economic losses.

Should the Secretary decide to establish a compensation mechanism for identity-preserved producers who suffer economic losses caused by unintended presence, the Committee believes the compensation mechanism should be modeled on existing crop insurance. To obtain compensation, a farmer would need to demonstrate: 1) prior intent to produce an identity-preserved product; 2) use of practices appropriate for the production of the product; 3) that the

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product specifications were reasonable and fell within the range of insurable products set forth in the insurance product; and 4) that an actual financial loss was incurred and the magnitude of that loss. Only those farmers who obtained such insurance prior to planting a crop would be eligible to receive such compensation if the above criteria were met. USDA should enlist the assistance of its Office of the Chief Economist to ensure that the program is designed in such a way that it minimizes any potential adverse impacts on innovation or trade.

The AC21 also recognizes that current crop insurance products available to producers who are not growing commodity crops are limited in availability, coverage, and affordability. As such, it is also recommended that the Secretary work with agricultural producers and insurers to address these limitations and provide more comparable base coverage for these producers for their risks.]

[Option II:

The AC21 reviewed several different potential compensation mechanisms. None of the compensation mechanisms discussed presented an ideal solution. However, the Committee determined that the closest and best solution is based on an insurance model where all stakeholders participate at some level, and no stakeholder bears the full cost burdens associated with the insurance. It is critical that the model does not lay fault at the feet of any of the participants.

Because the insurance model is not perfect, and implementing such a program will raise novel challenges in terms of payment rates and eligibility, AC21 recommends that the USDA begin a pilot program of insurance open to producers in the 2013 crop year, to test the parameters and understand the limits. A GE-sensitive producer should be able to enroll in the program by demonstrating his intention to participate in a GE-sensitive market (i.e., by producing a written contract with a .9% threshold) and his plan for producing the crops to limit adventitious presence. The area’s GE producers would be required to enroll in the program, as a condition of enrollment in any USDA- supported commodity, crop insurance or conservation program. This would encourage all producers’ engagement in stewardship programs to limit unintended presence on the GE-sensitive producer’s crops. The GE stewardship programs would be managed and implemented via the technology agreements associated with the purchase of GE seeds.

Following harvest, the GE-sensitive producer’s crops would be tested to determine whether the harvested grain meets the market’s needs, reflected in the producer’s enrollment documents. If the producer has suffered an economic loss because of adventitious presence, then that loss would be compensable under the terms set forth in the insurance contract.

For the GE-sensitive producer who does not enroll in the program, the loss of market premiums may not be recovered. For the GE producer who does not enroll in the program, that producer may be subject to liability and possible ineligibility for other USDA

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programs. The seed providers will require participation in the program and will provide distinct stewardship mechanisms that prevent unintended presence. Failure to adequately engage producers in stewardship programs may increase economic losses triggered by unintended presence and impose new costs and liability exposure along the value chain.

The pilot program would be regionally based, using an area with an average number of GE-sensitive producers in comparison to GE producers.

The committee further recommends that integration of the pilot program with the research and data collection on economic losses may result in the most reliable set of data on which a permanent national program could be based.]

[Option III (new Chair’s “bridging” option):

To strengthen the understanding of the impact of unintended GE presence in identity-preserved products, USDA should evaluate data it has gathered under Recommendation IV regarding actual economic losses by farmers who grow crops for identity-preserved markets. Upon evaluation of that data, USDA should establish a pilot program(s) in a region(s) where unintended presence-related economic losses have been determined to have occurred. Such a pilot program(s) would have a finite lifespan and would be developed based on data on the frequency and types of losses in the region. The pilot program would include incentives for the development of joint coexistence plans by neighboring farmers as well as a new crop insurance tool developed to address economic losses caused by unintended presence incurred by farmers who grow crops for IP markets.

Under a pilot program, farmers growing crops for IP markets would have the option of purchasing insurance, engaging in a joint coexistence activity with his/her neighbor(s), or both. Farmers growing for IP markets who develop an approved joint coexistence plan with their neighbor(s) would be offered a reduction in their IP insurance premium. Non-IP growers who enter into an approved joint coexistence plan with an IP producer neighbor could be offered a reduction in their conventional crop insurance premium or a preferred status under USDA conservation programs. Standards for eligible joint coexistence plans would be established by USDA but evaluation of the acceptability of particular plans might be evaluated by local conservation district technicians, USDA personnel (in the Natural Resource Conservation Service or the Farm Services Agency) or by accredited third-party providers. Criteria would be established prior to implementation of a pilot program for what would constitute success for the program. USDA should seek public input on what those criteria should be. The pilot would be considered to sunset automatically unless all the criteria for success were met. In developing the crop insurance portion of the pilot program, the Secretary should take into account domestic and global policy implications, as well as the potential trade/economic implications of instituting such a mechanism.

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The AC21 believes that the compensation mechanism component of any pilot program should be modeled on existing crop insurance. To obtain compensation, a farmer would need to demonstrate: 1) prior intent to produce an identity-preserved product; 2) use of practices appropriate for the production of the product; 3) that the product specifications were reasonable and fell within the range of insurable products set forth in the insurance product; and 4) that an actual financial loss was incurred and the magnitude of that loss. Only those farmers who obtained such insurance prior to planting a crop would be eligible to receive such compensation if the above criteria were met. USDA should enlist the assistance of its Office of the Chief Economist to ensure that the program is designed in such a way that it minimizes any potential adverse impacts on innovation or trade.

The AC21 also recognizes that current crop insurance products available to producers who are not growing commodity crops are limited in availability, coverage, and affordability. As such, it is also recommended that the Secretary work with agricultural producers and insurers to address these limitations and provide more comparable base coverage for these producers for their risks.]

STEWARDSHIP AND OUTREACH

As noted earlier, coexistence is not new for agriculture, but what needs to be done to achieve coexistence has changed with technological and market changes.

AC21 members have discussed at considerable length the risks, rewards, and responsibilities associated with crop production, whether GE, non-GE, conventional, identity-preserved, or organic, and how those factors shape potential paths forward to bolster coexistence and address any potential economic losses.

Some members believe that with a farmer’s agreement to the terms of a contract, including purity and other specifications and the premium associated with meeting those specifications, the economic risks associated with fulfilling that contract should be entirely assumed by him/her and should be covered by the premium price agreed to under contract.

Others believe that farmers producing crops that inadvertently show up in neighbors’ IP crops or that potentially compromise their neighbors’ ability to produce those IP crops bear some responsibility for containing the outflow of the plant genes.

With this backdrop of often strongly held, differing views that are not readily resolved nor likely to fade away, AC 21, members nonetheless recognize that finding ways to support progress toward coexistence is crucial for the overall health of American agriculture and that this effort needs to involve the entire food and feed production and handling system. Farmers in particular not only bear contractual responsibilities,

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written or otherwise, for their own production but also are members of agricultural communities that may be affected by their actions.

Farmers, if they are not fully aware of the implications of coexistence needs for their own operations, need to be made aware of those implications. This will be particularly important when farmers make decisions about what to plant, where to plant particular crops on their lands, how to time planting of their crops, and what steps are needed to ensure the quality of their production.

Because the decision to produce for a commodity or identity-preserved market is influenced by factors such as price, yield, weather, and the contract terms, it is important that farmers incorporate coexistence considerations in their planning, agronomic, and harvest-handling operations. In particular, farmers need to have ongoing dialogues with their neighbors on how they can work together regarding identity-preserved production.

Farmers also need to be well-informed about the implications of contractual agreements they may reach for identity-preserved products. When growers use written contracts, those contracts should provide clarity on at least the following parameters: grower practices for producing a crop of desired quality and characteristics, the percentage of unintended presence allowed; point of delivery; time of delivery; and compensation; and should highlight the need for the grower to work with his/her neighbors to address shared concerns.

USDA should support appropriate industry measures to increase the clarity of contract requirements. This might include helping to articulate, perhaps through “model contracts,” specific components that could be included.

Beyond outreach to provide education about the components of coexistence and their importance, it will be critical that farmers be supplied with the best information about what methods work in helping to mitigate potential economic risks from unintended gene flow and be provided with tools to facilitate farmer-to-farmer communication.

Stewardship plans increasingly need to focus not only on management practices designed to produce high quality crops but also on measures that support neighbors’ efforts to do the same.

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In considering potential USDA actions to bolster coexistence, the AC21 understands that voluntary innovation and incentives are a tradition in agriculture and are generally more strongly supported by farmers than government mandates or regulations.

At the same time, some AC21 members feel that a purely voluntary approach to farmer adoption of measures to minimize unintended gene flow will achieve a level of change insufficient to allow for strong, diversified agricultural production in the future.

A balance must be struck, therefore, to encourage and incentivize adoption of best management practices and neighbor-to- neighbor cooperation while maintaining market confidence in U.S. agricultural commodities.

When advantageous to support the diversity of farmers’ needs, the AC21 also encourages farmers to create coexistence zones or other local mechanisms to support farmer preferences and strengthen communities. Committee members also believe that USDA can play a role in support of these efforts.

Recommendation II.

USDA should spearhead and fund a broad-based, comprehensive education and outreach initiative to strengthen awareness of coexistence and the importance of coexistence for diverse agricultural production systems. USDA should design and make available to the agricultural community voluntary and outcome-based strategies for facilitating production of all types of identity-preserved (IP) products.

Working in conjunction with all agricultural stakeholders, public organizations, and State and local governments, this effort should highlight the need for good on-farm production practices, strategies for neighborly farmer-to-farmer collaboration, the value of private marketing contracts, and the risks and responsibilities associated with meeting private contractual arrangements for IP production. Such an initiative should seek broad grower participation and utilize expertise from a range of production types. It should seek to promote local, voluntary solutions and accommodate local and regional diversity in agriculture and should be mindful of the range of farmer production needs. To the extent that measurable, concrete goals for coexistence are not being met locally via initial measures, further steps to improve performance should be undertaken. There is no one “coexistence shoe” that will, in all situations, prove the perfect fit, and indeed, the AC21 sees considerable value in regional experimentation with a diversity of approaches.

USDA should also utilize the capacity and technical expertise within the land grant university and the research extension system. As part of the outreach, stakeholders should be provided with tools to measure the success and effectiveness of their coexistence efforts.

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Recommendation III.

USDA should work with agricultural stakeholders to develop a package of specific mechanisms that: (1) foster good crop stewardship and mitigate potential economic risks derived from unintended gene flow between crop varieties; and (2) promote and incentivize farmer adoption of appropriate stewardship practices.

USDA, in collaboration with agricultural stakeholders, should work to strengthen mechanisms that foster communication and collaboration across the value chain and between different sectors of agriculture. Through this collaboration, USDA should build and provide access to “toolkits” or resources that encourage farmers and neighbors to adopt good farming practices that support identity-preserved production and minimize unwanted gene flow, addressing, for example, farmer-to-farmer communication, cropping plans, temporal and physical isolation, harvesting techniques, and inspections. USDA should promote the use of third-party verification of appropriate stewardship practices. USDA should encourage seed providers to include information about stewardship practices with commercial seed purchases and monitor adoption. USDA should support appropriate measures to strengthen the clarity of contract requirements and of actions that may be taken to meet the requirements set out in those contracts. USDA should create incentives for joint activities by neighbors or regionally to provide buffer strips or zones that facilitate identity-preserved crop production through existing conservation programs.

RESEARCH

USDA occupies a unique and central position in supporting the advancement of agricultural knowledge. USDA conducts or funds a broad range of both applied and basic scientific research as well as important economic analyses that help inform agricultural policymaking. USDA’s role as a supporter of all forms of agricultural production enables it to evaluate a range of technologies and methodologies that are relevant to the promotion of coexistence.

Because of the complexity of achieving coexistence in a changing production landscape and an evolving marketplace, there are a number of areas in which USDA research activities could strongly benefit this effort.

The AC21 has wrestled with identifying and quantifying actual economic losses to farmers resulting from unintended presence of GE material in their crops. The AC21 considered GE testing data demonstrating that some consignments of identity-preserved and organic commodities were found to contain GE material in amounts that exceeded contractual requirements or de facto market standards. However, the data

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obtained thus far are not measurements of actual losses, nor do they account for expenditures taken in the unfulfilled attempt to meet contractual expectations.

Such data may be very sensitive for producers and purchasers. However, because of USDA’s long experience with the gathering, protecting, and aggregating of sensitive market data to enable useful statistical and market analyses, USDA (and specifically the Economic Research Service, or ERS) may be uniquely able to seek out and analyze data relating to the economic losses identified in the first element of the Secretary’s charge.

Having such data would help to inform domestic and global policy discussions that may arise regarding potential compensation mechanisms to address any actual and documented economic losses.

Effective stewardship by farmers of their crops in terms of both their own production and that of their neighbors depends on using the best production methods that are appropriate for their crop, their situation, and their region.

Information about the efficacy of gene flow risk mitigation techniques, especially at a landscape level and for crops other than major ones, is often anecdotal. Evaluating the performance of current techniques and the development of new ones, as needed, will be very important to further the attainment of coexistence and reduce its cost.

As more GE crop varieties are commercialized, and particularly as new GE varieties carrying new functional traits (i.e., traits that affect the downstream uses of those crops) are developed, it will become increasingly advantageous to have new genetic tools available that restrict the unintentional transfer of those traits to other plants, without imposing any adverse impacts on the growth or quality of the crop. Such tools could be useful in helping to protect identity-preserved crop production.

One final important area of research, which will help in the monitoring of the ability of the commercial seed supply to meet the diverse needs of farmers, would be to gather data from industry on the levels of unintended GE presence in GE, non-GE and organic seed and the overall genetic purity they seek to maintain. This information, which would undoubtedly also be commercially sensitive, could be gathered and aggregated by ERS, and help to provide the public assurance about the continued quality and diversity of the U.S. seed supply.

Recommendation IV.

USDA should fund and/or conduct research in a number of areas relevant to the promotion of coexistence in American agriculture.

This research should include:

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Quantification of actual economic losses incurred by farmers as a result of unintended presence, and occurrences of these losses over time and in different geographies.

Assessment of the efficacy of existing on-farm and post-farm gene flow mitigation techniques on a crop-by-crop basis and development of improved techniques as needed.

Assessment of the efficacy of existing gene flow mitigation techniques in seed propagation/multiplication or production on a crop-by-crop basis and development of improved techniques as needed.

Development of genetic tools to limit unwanted gene flow to sexually compatible plants.

Gathering and aggregating, on an ongoing basis, data from seed companies on unintended GE presence in commercial seed supplies.

SEED QUALITY

All AC21 members recognize the important role of seed quality in meeting their customers’ needs and in successfully fostering coexistence at the farm level. The continued success of agriculture depends on a diverse supply of high-quality seed that is of the purity necessary to meet each farmer’s needs.

One key source of unintended presence entering into an identity-preserved production system is the starting seed. Seed may unintentionally contain unwanted material either because it was produced without adequate protocols to prevent gene flow or through unintentional commingling at some point in the production-handling-marketing-planting process.

The unintended presence of genetic traits in seed will carry over into the crop, and will likely only increase as a result of whatever additional gene flow occurs during the growing season or any additional inadvertent commingling that occurs during or after harvest. For this reason, managing unintended presence in identity-preserved crops entails a partnership between the seed industry and farmers. The seed industry’s challenge is to provide farmers seed that offers farmers as much of a cushion in his/her management of gene flow as is economically viable.

Some AC21 members have expressed concern that, over time, non-GE seed and germplasm stocks for a given crop will have ever-increasing levels of unintended GE traits as more and more GE crop varieties are developed and commercialized. For the crop for which the largest number of GE varieties have been commercialized, corn, others argue that because GE varieties already account for over 90% of all U.S. corn

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production, additional increases in unintended GE presence in non-GE corn seed and germplasm are unlikely with continued application of appropriate coexistence and quality management procedures.

All members, however, acknowledge the importance of continued attention to the production of seed of high purity to meet farmers’ needs. Industry attention to the continued maintenance of an ample supply of regionally adapted, high quality, GE, IP non-GE, conventional, and organic seeds for people wishing to produce such crops will be critical in order for the associated agricultural sectors to flourish. The planting of high purity seeds provides a biologically based buffer or limit on the effects of gene flow and unintended presence in any given season, and therefore also will limit the frequency of episodes in which unintended presence leads to market rejection and possible loss of market premiums.

It is important to point out that, especially in an age of ever-increasing technical capabilities for testing and detection, it is not realistic to suggest that commercial seed producers can guarantee zero presence of unintended genetics in seed. Technical consideration of seed purity issues is likely to take place in discussions by another USDA committee, the National Genetic Resources Advisory Council (NGRAC). However, the marketplace and the biological realities of crop production set boundary conditions for what is achievable. But the overall fact remains: special attention by industry to unintended GE presence in seeds destined to produce crops for GE-sensitive markets is important.

Seed industry representatives on the AC21 have spoken of the industry’s ongoing commitment for ensuring that quality seed continues to be available to GE, IP non-GE, conventional, and organic growers, and that the supply of such seed will be adequate to meet demands. There are a number of tools used by industry to help this commitment, including the use of field isolation “pinning maps,” the use of contracts, seed quality management systems, and grower communication about planting areas. In addition, tracking, recordkeeping, testing and other measures with appropriate management systems are essential parts of seed product development and the commercial life cycle to address quality assurance and seed product integrity.

While seed purity issues have been highlighted here, it is also important to note that most identity-preserved production is intended to fill niche markets and producers for those markets may not have access to the range of locally adapted seed options for their production that commodity producers may have. Some AC21 members have noted such constraints for their own production.

It is important that the agricultural community devote resources to ensuring that there is an adequate range of high quality locally adapted seed varieties using elite germplasm available to serve all producers. USDA can help the agricultural community identify market needs. Ultimately, however, the seed industry must operate in a marketplace that responds to grower preferences and to demand.

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Recommendation V.

USDA should recommit to maintaining the highest purity in its germplasm banks. USDA should also work with seed suppliers to ensure that a diverse and high quality commercial seed supply exists that meets the needs of all farmers, including those supplying products to GE-sensitive customers.

For every plant species for which a new, genetically engineered variety enters the market, the USDA should assure that a credible plan exists and is implemented to monitor and maintain purity of publicly held germplasm. Each plan should include best management practices for maintenance of purity, and should include measures to:

Determine the presence of the transgenic trait or traits in publicly held germplasm stocks;

Conduct ongoing monitoring of unintended gene flow to germplasm stocks, sufficient to detect any significant increase in the frequency of AP in germplasm and breeding lines;

Address what to do when unintended GE presence is detected in such germplasm stocks.

USDA should continue its support for the development of an “organic seed finder” database and strengthen outreach and education on seed quality management systems in general and specifically on existing management systems used for non-GE and organic seed. USDA should task the NGRAC to develop a plan in conjunction with the seed industry for ongoing evaluation of the pool of commercially available non-GE and organic seed varieties and identification of market needs for producers serving GE-sensitive markets. These activities should be conducted in such a way as not to interfere with functioning markets and the activities should be independent of regulatory approvals for GE products.

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Names and affiliations of AC21 members who have joined in consensus on this report:

…

Names and affiliations of AC21 members who have not joined in consensus on this report:

….

Comments from members who have joined in consensus:

….

Comments from members who have not joined in consensus:

…..

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Appendix II:

Recommendation I new version drafted overnight on 8-27-12For AC21 consideration on 8-28-12

To strengthen the understanding of the impact of unintended GE presence in identity-preserved products, USDA should evaluate data it has gathered under Recommendation IV regarding actual economic losses by farmers who grow crops for identity-preserved markets. If the Secretary, in considering the loss data, determines that the situation warrants development of a compensation mechanism to help address such losses, the Secretary should implement such a mechanism based on a crop insurance model. Concurrent with this data gathering, USDA should conduct an additional research program which would attempt to identify appropriate actuarial parameters from which a compensation mechanism could be developed. When a compensation mechanism is to be implemented, it should be tested through a “pilot(s)” established in a region(s) where unintended presence-related economic losses have been determined to have occurred. Such a pilot program(s) would have a finite lifespan and would be developed based on data on the frequency and types of losses in the region. The pilot program(s) would include incentives for the development of joint coexistence plans by neighboring farmers as well as a new crop insurance tool developed to address economic losses caused by unintended presence incurred by farmers who grow crops for IP markets.

Under such a program, farmers growing crops for IP markets would have the option of purchasing insurance, engaging in a joint coexistence activity with his/her neighbor(s), or both. Farmers growing for IP markets who develop an approved joint coexistence plan with their neighbor(s) would be offered a reduction in their IP insurance premium. Non-IP growers who enter into an approved joint coexistence plan with an IP producer neighbor would be offered a reduction in their conventional crop insurance premium or a preferred status under USDA conservation programs. Special attention should be paid to ensure that incentives offered are sufficient to encourage wide participation in coexistence plans. Standards for eligible joint coexistence plans would be established by USDA but evaluation of the acceptability of particular plans might be evaluated by USDA personnel or other parties, perhaps by USDA personnel in the Natural Resource Conservation Service, the Farm Services Agency, or Extension, by local conservation district technicians, by cooperating State agricultural officials, or by appropriate accredited third-party providers. USDA should seek public input on what those acceptability criteria should be. Any pilot activity would be considered to sunset automatically unless all the criteria for success were met. In developing the crop insurance portion of the pilot program, the Secretary should take into account domestic and global policy implications, as well as the potential trade/economic implications of instituting such a mechanism.

Even if a compensation mechanism is not ultimately established, USDA should implement the mechanism to facilitate development of joint coexistence plans by neighboring farmers. In the

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absence of a compensation mechanism, farmers who develop an approved joint coexistence plan with their neighbor(s), if the plan included at least one IP producer, would be offered a reduction in their conventional crop insurance premium or a preferred status under USDA conservation programs.

The AC21 believes that compensation mechanisms should be modeled on existing crop insurance. To obtain compensation, a farmer would need to demonstrate: 1) prior intent to produce an identity-preserved product; 2) use of practices appropriate for the production of the product; 3) that the product specifications were reasonable and fell within the range of insurable products set forth in the insurance product; and 4) that an actual financial loss was incurred and the magnitude of that loss. Only those farmers who obtained such insurance prior to planting a crop would be eligible to receive such compensation if the above criteria were met. USDA should enlist the assistance of its Office of the Chief Economist to ensure that the program is designed in such a way that it minimizes any potential adverse impacts on innovation or trade.

The AC21 also recognizes that current crop insurance products available to producers who are not growing commodity crops are limited in availability, coverage, and affordability. As such, it is also recommended that the Secretary work with agricultural producers and insurers to address these limitations and provide more comparable base coverage for these producers for their risks.

Recommendation III.

USDA should work with agricultural stakeholders to develop a package of specific mechanisms that: (1) foster good crop stewardship and mitigate potential economic risks derived from unintended gene flow between crop varieties; and (2) promote and incentivize farmer adoption of appropriate stewardship practices.

USDA, in collaboration with agricultural stakeholders, should work to strengthen mechanisms that foster communication and collaboration across the value chain and between different sectors of agriculture. Through this collaboration, USDA should build and provide access to “toolkits” or resources that encourage farmers and neighbors to adopt good farming practices that support identity-preserved production and minimize unwanted gene flow, addressing, for example, farmer-to-farmer communication, cropping plans, temporal and physical isolation, harvesting techniques, and inspections. USDA should promote the use of third-party verification of appropriate stewardship practices. USDA should encourage seed providers to include information about the importance of coexistence and the benefits of effective communication with their neighbors about their planting intentions as a means to address potential conflicts as part of commercial seed purchases and/or technology contracts and monitor adoption. USDA should support appropriate measures to strengthen the clarity of contract requirements and of actions that may be taken to meet the requirements set out in those contracts. USDA should create incentives for joint activities by neighbors or regionally to provide buffer strips or zones that facilitate identity-preserved crop production through existing conservation programs.

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